Friday 15 December 2017

Summer livin' not easy if you fail to get financial planning right

Holiday rental scams, and getting your timing wrong when selling shares or property, could cost you tens of thousands of euro, writes Louise McBride

'Summer is often the time that many of us adopt a more easygoing attitude to our finances - however, doing so could see you lose out on thousands, or even tens of thousands, of euro'. Stock image
'Summer is often the time that many of us adopt a more easygoing attitude to our finances - however, doing so could see you lose out on thousands, or even tens of thousands, of euro'. Stock image
Louise McBride

Louise McBride

Summer is often the time that many of us adopt a more easygoing attitude to our finances - however, doing so could see you lose out on thousands, or even tens of thousands, of euro. There are a number of summertime trends and nuances which are important to be aware of before making any major financial decision in the coming months. Here are some of the main ones.

Don't 'sell in May'?

The old adage to 'Sell in May and go away' advises investors to sell their stock holdings in May and then get back into stock markets in November - so as to avoid the traditional seasonal decline in equity markets between May and October.

However, the US institutional broker Strategas believes the old saying may prove wrong this year. Strategas examined the performance of the S&P 500 (a stock market index that includes the 500 largest companies in the US) since 1950.

"Historically the summer months may not be the best time for S&P 500 performance - but it is important to put that into the context of current market conditions," said Todd Sohn, a technical analyst with Strategas. "When you are in a market uptrend, performance during May to October is usually stronger than history suggests. Based on our data, ignoring the old adage is likely preferable this year." A market uptrend, according to Strategas, is when the S&P 500 is trading above its 10-month average. Strategas's figures show that the S&P 500 began this month in an uptrend.

Historically, stock markets have tended to perform more poorly over the summer months because investors are often away on holiday - and markets are quieter. "Historical analysis suggests that selling in May works 90pc of the time across developed markets," said Peter Brown, one of the founders of Dublin firm Baggot Investment Partners. "However, I don't believe in selling in May this year. I think markets will be flat this summer. So even though investment returns may not be that high, it would be best to stay put."

Of course, anything can happen in stock markets and the recent eerie calm on Wall Street has some investors worried that something nasty could be about to happen.

It is time spent in the market - rather than timing the market, which matters most when it comes to investment returns, according to David Hillery, senior investment strategist with Davy.

"As a general rule, investors should stay in the market," said Hillery. "Analysis shows that an investor who put €1m in the market in 2001 would have around €2m today. However, if you missed the 10 best days in the market since 2001, you would have made a return of about 9pc. If you missed the best 30 days, you would be in negative territory."

Selling the family home in August

Putting your house on the market at the wrong time could see you struggle to secure a buyer and get tens of thousands - perhaps hundreds of thousands - less for your house.

Estate agents typically advise against putting a house on the market in August. "August is not a great month to sell a family home because people are away and families are focused on getting their children back to school," said Barry Connolly, associate director with Savills Residential.

Early May can be a good time to put a family home on the market - as there is still a couple of months to go until the school holidays kick in. Selling at this time also usually gives you the advantage of showing a property in better weather. "Any family home with a decent garden is always going to look better in the summer," said Connolly.

The property market can become sluggish in late June and July as schools close and families head away for the holidays. However, the shortage of properties on the market could still see you get a good price for your property this June or July.

"Traditionally the market has been very seasonal: April, May and September is when we list most of our properties," said Connolly. "The seasonal factor is still relevant this year - but it's not as relevant as previous years. There's a demand for properties which way outstrips supply - and sellers are more likely to outperform the market when it's like that."

If you plan to sell your property in September, consider putting it on the market in the last week of August. "September is a great month to sell - but the issue with September is that it's a short selling window," said Connolly. "So be ready to be on the market in the last week of August."

Owners of properties in popular Irish holiday spots need to approach their timing differently to those selling family homes in Dublin and major urban areas, according to Robert Ganly, managing director of the estate agents Ganly Walters.

"You'd make sure you were on the market by early August if you were selling in the likes of Connemara, Roundstone or West Cork," said Ganly. "You have the holiday home market there. Also a lot of people come back to Ireland at holiday time - and they can use that time to look for properties. There's a big demand for country homes in the middle- to upper-end of the market that are within an hour's drive of an international airport."

Beware rental scams

Be wary of holiday rental scams, where fraudsters target people who are booking holiday rental properties abroad.

With these scams, the fraudster copies photos and information from a genuine listing on a property website and creates a false listing on another site. Should you enquire about renting that property for your holiday, the scammer will tell you that the property is in high demand and that the best way to secure it is to transfer a deposit immediately. However, after you've transferred the money you won't be able to get in touch with the person you were in contact with - and your money will be gone.

"In some cases, consumers have paid thousands by money transfer - only to arrive at the destination to find that the accommodation doesn't even exist," said Martina Nee, spokeswoman for the Dublin-based EU consumer watchdog, the European Consumer Centre.

"In other cases, the accommodation does exist - but the email account of the host (the genuine holiday rental website) has been hacked."

Should the email account of a genuine firm be hacked, a criminal will be accessing your email messages - even though you're sending those messages to the correct address. In such cases, the criminal will know what villa or accommodation you're enquiring about and will typically send you an email asking you to pay for your stay by international bank transfer.

"Do your research thoroughly before booking holiday rental," said Nee. "Make sure you're using a legitimate website and if the site provides a secure payment, stick with this. Never do a money transfer."

Leave shopping spree until after May

Retailers are usually reluctant to discount goods in May, so bargain hunting is better left until the later summer months. The goods that are heavily discounted by retailers vary throughout the summer. Laptops are among the most heavily discounted items in June, while July is one of the best times to get a deal on a TV, according to recent research by the British credit card company, July is usually a good month to buy heavily discounted beachwear. August is a good time for smartphone discounts.

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